Transcript The basic ingredients of the US economy

The basic ingredients of the US
economy
Before working with this presentation
you might like to look at ‘The short
economic history of post war world its elsewhere on bized.’
The basic ingredients - 1
• Natural resources
including the climate
• Labour - productive look at presentation on
immigration
• Economic swings have
been met with ability
to accept lower wages
• Protestant work ethic
• high value on
education and an
ability to cope with
change
• Human capital is a key
factor to success
• nimble minds and
adaptable skills
Basic ingredients - 2
• Organisation very
important
• market signals lead
policy
• division of
labour/scientific
management
• now being flattened
• Funds accumulation
very successful
• stocks and bonds
popular investments
for all
• Federal and state rules
govern financial
behaviour and
information disclosure
Basic ingredients - 3
• The role of the market
in a mixed economy
• private ownership
• two-thirds of output
goes to personal
consumption
• it is a consumer
economy
• Personal freedom
central
• supply and demand
decide what is
produced and at what
price
• Some goods/services
are best provided by
State
Basic ingredients - 4
• Public goods include
most education,
justice, roads, social
statistics and the
reporting of these,
defence
• Government regulates
monopolies
• Government provided
medicare for the
elderly and the poor,
regulates
environmental
issues,provides loans
for those in natural
disasters and drives
the space programme
Basic ingredients - 5
• Consumers send
signals through
purchases and are now
stating what they will
accept in health, safety
and ethical issues
• Labour force has
changed from farm
based to city based,
then onto service
based.
• Trend away from selfemployment to
working for others
• Next: The role of
government in the
economy
Government’s role in the
economy
• Stability and growth
• maintaining macro
stability
• this began as a fight
against recession and
has moved onto
controlling
inflationary pressures
• In 1960’s more
emphasis on fiscal
policy, now monetary
policy is main tool
• All monetary policy
directed by Federal
Reserve Board
Role of Government - 2
• Regulation and
Control
• two main types controlling prices and
anti-trust laws, which
control competitive
behaviour
• social goals also set
• These include: public
health, safety and the
environment
• De-regulation arose
during 1970’s
• Stop support for
inefficient industries
• promote change in
technology based
industries
Role of Government - 3
• Direct services
• national defence
• research and
development
• local and regional regeneration
• Direct Assistance
• low-cost loans
• Technical assistance to
small firms
• promote exports
• seek to stop others
putting up tariffs
• Medicare and
Medicaid
• Food Stamps
• success is not God’s
favour
Poverty and Inequality
• Poverty persists in the
richest nation on earth
• Government decides
what equals ‘poverty’
• In 1998 a family of
four was in poverty
below $16,530
• 13% of population
classified as this
• Masks reality of ethnic
poverty
• 26.1% AfricanAmericans
• Single parent families,
1 in 5 children live in
poverty
• 36.7% of AfricanAmerican children live
in poverty
Poverty and Inequality - 2
• 34.4% Hispanic
children live in
poverty
• In 1997 the wealthiest
20% of population
accounted for 47.2%
of nation’s income,
• poorest 20%
accounted for 4.2%
• The poorest 40%
accounted for 14% of
nation’s income
• Increased global
competition making
more workers
vulnerable
• tax system now less
favourable for the
poorest
Poverty and Inequality - 3
• What has happened to
the spirit of New
Deal?
• Increased dislike of
big government, high
spending, large tax
bills
• resulted in cuts in
social welfare
spending
• Privitisation
introduced
• Familiar battle of
opinions - efficient v
must make a profit, so
what is cut?
• Election of Bush
suggests that deregulation, lower
Federal spending and
welfare reform have
won